2007 Neighborhood Months of Supply Breakdown

Let’s do some more number-crunching and neighborhood analysis. Here’s a detailed look at single-family house “months of supply” (MOS) over the last year, broken down by neighborhood. “Months of supply” is just a way of looking at the relationship between the number of homes on the market and the number of sales taking place.

To calculate months of supply for any area, you simply divide the total number of homes for sale by the number of pending sales. Generally 6 months of supply is considered a “balanced market,” while below 6 is a sellers market and above is a buyer’s market. Historically, the highest MOS for the King County area (post-1993, pre-2007) was 6.7-6.9 in the winter of 1994-1995 (based on the best available data, which is sketchy pre-2000). The current county-wide MOS is 7.54.

For the graphs below, I’ve again taken the “Res Only” data from the NWMLS King County Breakout pdfs for January 2007 through January 2008, this time plotting the monthly value of MOS for each area. I’ve broken the data into the same five graphs as the last neighborhood breakdown post. This time I’ve plotted them on a bar graph, centered vertically on 6.0 MOS, so that it is easier to visually tell the difference between a seller’s and buyer’s market. Each graph again has the same scale on the vertical axis and has the King County aggregate figure plotted in red, so they can be easily compared.

For a description of which neighborhoods each area encompasses, as well as a map of the areas and a link to the source data, visit this page.

Note: With only 8 sales in January, Area 100 actually shot all the way up to over 21 MOS, which is above the limit of the axis. In order to keep all five charts at the same scale and still have the other charts be at a reasonable height, I chose to clip the vertical at 16.

KC SFH MOS: SW King
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KC SFH MOS: SE King
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Note: Area 701 (Downtown Seattle) doesn’t have a bar most months because there was only one pending sale all year, in October, when there was also one listing, thus resulting in a MOS of 1.

KC SFH MOS: Seattle
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KC SFH MOS: N King
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KC SFH MOS: Eastside
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Most neighborhoods followed right along with the King County aggregate, flipping from a seller’s market to a buyer’s market in September. However, there are a few notable exceptions. These include Enumclaw (Area 300), which jumped firmly into buyer’s market territory two months early with a MOS over 8. Also worth mentioning is Vashon Island (Area 800), which sported an MOS over 12 in December and January and Bellevue West of I-405 (Area 520), which has remained firmly at or above 10 MOS since September.

Clearly the strongest neighborhoods are in Seattle proper, with North Seattle neighborhoods (Ballard, Greenlake, Greenwood, Lake City, Northgate, Wedgewood, etc. – Area’s 705 and 710) showing the most resilience, still down in seller’s market territory with MOS’ in the 4-6 range. I would also like to point out that despite the presence of the Microsoft, three of the four Eastside neighborhoods nearest Redmond (Areas 520, 550 and 560) are all trending more toward a buyer’s market than the county as a whole, sporting January MOS of 14, 8, and 10, respectively. In fact, no Eastside neighborhoods remain seller’s markets, and the only ones with January MOS below the county-wide aggregate of 7.54 were East Bellevue (530) at 6.31, East of Lake Sammamish (540) at 7.48, and Juanita/Woodinville/Duvall (600) at 7.12.

The three strongest areas as of last month were Ballard/Greenlake/Greenwood (705) at 3.88, North Seattle (710) at 4.14, and West Seattle (140) at 5.08. Only two other areas remain seller’s markets: Queene Anne/Magnolia (700) and Richmond Beach/Shoreline (715). The three weakest areas were Eastside South of I-90 (500, which includes Issaquah) at 13.74, Bellevue west of I-405 (520) at 14.14, and Jovita/West Hill Auburn (100) at a staggering 21.38.

Does a MOS in the “buyer’s market” range indicate that now is a good time to buy in a given neighborhood? Not necessarily, and certainly not when it has only been in that range for a few months. If MOS stats stay consistently above six for a year or more, I believe we will really start to see some earnest price drops. Housing markets move very slowly. Only after the supply and demand situation has had a large amount of time to work itself out will you start to see a real effect on prices. “Buyer’s market” status just means that people selling their homes are facing a lot of competition for fewer buyers. It does not mean that now is a good time to rush out and buy, in my opinion.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

55 comments:

  1. 1
    Scotsman says:

    What really strikes me is how consistent months supply is from neighborhood to neighborhood right up until August, 2007. Then things really start to diverge with marked differences from one area to another. It will be interesting to see if they once again group more closely as markets continue to deteriorate, or if the diversity will continue, lending ever more credence to the old saying “location, location, location!”

  2. 2
    Alan says:

    I’ve been told that 3 months of supply is the boundary between prices rising and prices falling. Where did you get the 6 months number?

  3. 3
    The Tim says:

    A Google search for “balanced market” and “months of supply” shows most places citing the 6 month figure. I think I read it in the paper a couple times.

    P.S. (Holy crap, that Google search already indexes this page, and it’s result #3! Google is getting fast at updating their index. It was on there within hours of being published!)

  4. 4
    matthew says:

    Don’t worry people, the spring bounce is coming in March! More pink ponies will be migrating to the area and gumdrops will rain from the sky!

    Wait, whats that you say? More subprime ARMs reset in march 2008 than any other month?

    http://www.generationaldynamics.com/ww2010/resetbigchart.gif

    tick… tick…. tick….

  5. 5
    Pierce Anon says:

    Excellent work Tim, to bastardize an old saying, a graph is worth a thousand words.

    This is exactly the kind of post that a number of us advocated when you recently asked for suggestions. Keep up the good work.

  6. 6
    singliac says:

    yeah, this is great

  7. 7
    EconE says:

    Any way to do the charts for condos? I know that you’re a SFR guy but some of us (having been there done that) are interested in those cubicles in the sky. :^) I’ll bet it would look pretty ugly if you broke it down into price categories also.

  8. 8
    Greg Perry says:

    When I work with absorption rate numbers, I use 0-3 months Sellers Market. 3-6 months Balanced Market, 6 months and beyond Buyer’s Market.

    In July the Region was Balanced with the expception of areas 710, 107 and 520. Only 2 had dipped into Buyer’s markets.

    In August, the region was turning quickly.

    In September there were no more Sellers markets, and few Balanced markets.

    Here’s a heat map that I posted a few months back on the Seattle PI blog:

    [link]http://blog.seattlepi.nwsource.com/realestate/archives/124285.asp[/link]

    These areas are currently abosrbing inventroy: 140, 705 and 710 on the Westside, as are 530,540,550 and 600 on the Eastside. Some of the lower price ranges in these areas have dipped in to Sellers Markets.

    We’re seeing two markets in almost every area. The lower priced homes are absorbing, the higher price homes (affected by jumbo financing) by and large are not.

  9. 9
    Greg Perry says:

    BTW, Tim,

    Charts look great. This represented a lot of work.

    Try link again.
    http://blog.seattlepi.nwsource.com/realestate/archives/124285.asp

  10. 10
    david losh says:

    Price reductions would be another good graph. Sales below market value would be another handy item to have, but that would be tough to figure. In today’s market there are a lot of buyers who buy what they consider a bargain. We still see multiple offers in my office.
    I myself don’t price below market value, but for those that do the market is still very hot. Short sales are another thing that could be tracked because many lenders today do not want to take on more inventory.
    In this chart it shows area 700 which is Queen Anne and Magnolia which appear to be adding unsold inventory. There are many properties hovering around a million dollars that are not getting price reductions at the same clip lower priced properties are. Some people can afford to hold out when some others can not.
    This leads us into another catagory of affordability; affordable to whom? If you take the medium this to the medium that you are by passing the five per cent of the people that make the most money. There again where do people make money. Do people who live here make money here? Why can’t I make my money in Florida, Thailand, Viet Nam, Peru, or England and live here?

  11. 11
    george says:

    EconE: Good question but why not SFH + Condos when you’re trying to calculate MOS? Some of the demand is going to be for both, so don’t the two numbers need to be connected?

    What am I not getting?

  12. 12
    softwarengineer says:

    THE CUMULATIVE REGRESSION ANALAYSIS AVERAGE LOOKS SINUSOIDAL

    Hi Tim:

    Great graphs, looking at the overall mathematical trending, its definitely sinusoidal, with last Summer the the diametric opposite last gasp in sales outstripping supplies.

    I would add that the sinusoidal positive shift in realestate hesitancy should have occurred like Oct 06, but that was before a good percentage of the buyers knew what they were doing.

    I’d also add, the sudden increase in the Aug 07 to present positive wave sinusoidal backlog effect of unsold homes is not only buyers “getting it”; I imagine a decrease of homes on the market are folks [like my neighborhood] that have listed since last Summer too high and have decided to pull out and try selling in like 2010, instead of now. I saw this happenning in Seattle during the 1990 Bubble too. Seattle sellers can be “pig-headed” to get their price. The real difference though, and we’ve spoke of this before; significantly tighter lending requirements and jumbo payments make waiting a moot point for a large share of Seattle’s market; as qualified buyers become endangered species. These selling folks may just have to hand the keys back to the bank. Do these financial marginal cases even show on your graphs [they aren’t all subprime either, some are overlapping the prime loans too] as they coast to foreclosures?

  13. 13
    Greg Perry says:

    George,” EconE: Good question but why not SFH + Condos when you’re trying to calculate MOS? Some of the demand is going to be for both, so don’t the two numbers need to be connected?

    What am I not getting?”

    Yes, SFH +Condo data is easily obtainable. However SFH and Condos are somewhat like apples and oranges. They are both fruit, but different.

    I prefer to track SFH and Condos completely separately. I keep weekly SFH and Condo absorption rates by area / by price range. I can see at a glance what is moving and where.

    When I’m working with a Seller or a Buyer, I use absorption rates to negotiate my clients best possible position. AR’s can be computed to the Region/MLS area/zip code/neighborhood and sometimes down to a specific house style within a neighborhood (such as a rambler style).

    As I’m sure Tim will attest, the only obstacle in sharing the recaps for both SFH AND Condos in graph form is the time to put it all together. SFH generally get the most attention.

  14. 14
    Ray Pepper says:

    As I was looking around at the Seattle Home Show I was amazed at how crowded it was yesterday for opening day. I walked around and asked 4-5 home builder exhibits how their business activity was doing. All said very very busy. No apparent signs of recession but they are aware of it from the media.

    In dealing with my clients their is huge interest in buying and this last week alone I had 2 deals close with 3 more at the end of this month. I have 4 offers out for buyers in the midst of (short sale) waiting acceptance from banks and 3 conventional.

    We at 500 continue to brace for the worst but get busier and busier. Is 500 Realty Recession proof? I doubt that.

    An ERA agent had a great incentive that I had to inquire on at a booth . “We buy your home if it doesn’t sell.” As I discussed this plan with the Agent I asked how many homes has ERA bought back. He stated 0. He told me the plan and I began to shake my head. I encourage everyone to talk with an ERA Agent and ask about this offer. I contend this is what gives a typical Agent a bad name. Just inexcusable. I will NOT go into details but it disgusts me. He was upset I shook my head and began to ask me “stupid” questions about our model. I know there is no question that is supposed to be stupid, but trust me there ARE!!

    I proceeded to answer every question, offer a shirt, then left. Had some $9.00 Ivars fish and returned to the booth only to have a woman state to me “why are you prostituting yourself.?” I had just eaten, was tired from the walk, looked at her and simply said.” Can I offer you a T Shirt or bumper sticker?” I was too tired to go at it again or engage in more incompetent conversation.

    off for round 2!

    Ray Pepper
    Broker
    http://www.500Realty.net

  15. 15
    CashOnlyPlease says:

    It is kind of exciting living in the Northwest and still being on the cusp of the bubble. The realtwhores and trolls are long gone from most of the other national bubble sites.

    Even one of my good friends (a mortgage broker) knows that about 25% of the people that come for loans (mostly 0% down broke people) can’t get them anymore, but he doesn’t see the bubble bursting either. It’s like a surreal dream where you are trying to warn people at the bottom of the hill that the avalanche is coming down the mountain, but they can’t (or won’t) see it.

    It’s different here alright, just like everyon else.

  16. 16
    matthew says:

    Ray,

    There will always be “greater fools” looking to buy on the way down.

    However, judging by Tim’s work, it appears that there are many more people right now that are interested in selling than there are people interested in buying.

    Unless of course you have some actual DATA to present that suggests otherwise…

  17. 17
    EconE says:

    George…Greg pretty much answered my question for me. Thanks Greg.

    I think that if condos were done there were would actually be some data for 701 and I have a sneaking suspicion that the only reason that MOS are so low for Ballard with the SFR’s is that many have been torn down for condos and townhomes.

  18. 18
    lilblackbird says:

    The months of supply by neighborhood graphs make it clear that were it not for financiers’ newly found reluctance to give out large sums of money to every Tom, Dick and Harriet, regardless of means, the good folks of King County would be quite content to keep signing away ever larger amounts of their wages, or competing for ever smaller, more decrepit or farther away properties.
    At my work and in my large extended family (in-laws), few own within the city, but many have recently bought in outlying areas with good transit options. I talk to coworkers and others I know when I get a chance, and almost nobody has the idea (or hope) that prices have or will fall in King County or near.
    Looking at those graphs I understand why.

  19. 19
    AndySeattle says:

    David Losh said:
    “This leads us into another category of affordability; affordable to whom?”

    I get the point you are trying to make, but just so that there are true apples to apples comparisons most affordability studies are based on reported median incomes of the census at hand. Using this method it’s much easier to avoid a subjective discussion.

  20. 20
    Debra Sinick says:

    Thanks, Tim for all the charts. It is good information. I think it does point to what I have said previously, even within King County and other areas, markets are local. As you stated, certain neighborhoods in Seattle, area 705 and 710, are still going stronger than most. Even on the eastside areas do vary tremendously. You are correct that South Bellevue, area 500, and West Bellevue, area 520, are currently the worst performers on the eastside. Around Microsoft, area 530, had the best performance on the eastside over the last year.

  21. 21
    Greg Perry says:

    “There will always be “greater fools” looking to buy on the way down.

    However, judging by Tim’s work, it appears that there are many more people right now that are interested in selling than there are people interested in buying.

    Unless of course you have some actual DATA to present that suggests otherwise…”

    In the lower price ranges, I have plenty of DATA that suggests otherwise.

    140, 705 and 710 have very active Sellers markets in the lower price ranges. Other Seattle areas are absorbing inventory in the lower price ranges. Lower price ranges on Eastside markets are also aborbing inventory (except MLS area 500 for some reason). The mid prices are $500k to $800k are holding. Rural McMansions on the Eastide are sitting.

    I lost 2 multiple offers last week for a client looking Redmond/No Kirkland). Important to note that these multi offers did not escalate in price but went under contract at asking price. We were asking for closing costs. The client has enough selection to look at that we can keep offering until he gets the what he wants.

    Last month we put a deal together after a 7 week negotiation. Seller was asking $680k for a Bellevue house that would have sold above $700k in spring 2007. Client got the house for $643K plus concessions on the inspection. The appraisal for the bank came in at $690k.

    When AR’s and market times are high, we’re negotiating very hard. Where Ar’s are low, we’re seeing multiple offers.

    As I posted above, most MLS areas right now have 2 to 3 separate markets going in them.

  22. 22
    softwarengineer says:

    LOCATION, LOCATION, LOCATION

    Most of the blogs from realitors putting lipstick on the real estate recession pig; use specific locations as “exceptions”.

    Have any of bloggers ever gone to a prime location dealer to buy a used car? Ya pay at least an extra 20% for the same car, don’t ya [if you researched it properly]. Conversely, knowing that low milage newer used cars are totally glutted in supply in Seattle [like homes for sale]; I use search engine websites to find the same cars for almost half the price, but I buy them at big dealers too with factory warranties too. The dealers that close the paperwork with me lament, “I didn’t make $500 on this deal”….lol

    I agree, its location, location, location….and avoid the high price locations that have significantly higher stickers [and are usually the areas with glimmer sales]…

    Th court house is a great location to find homes for 50% off….lol

  23. 23
    matthew says:

    Greg,

    Do you have any data to back up your point? You say that the lower end is holding up better than the higher end, but I don’t see any data on the link that you posted to support that.

    Talking about markets within markets seems to be getting a bit ridiculous. Once a 750k house gets cut to 650k, why would anyone pay 650k for the 650k house? This price cutting will eventually affect the lower end of the market. We are seeing people that are hesitant to cut prices at the upper end, and therefore their houses are staying on the market. Once a substantial lowering of prices occurs, this will effect the entire market at all price levels.

  24. 24
    Debra Sinick says:

    Software Engineer:

    There usually is a reason certain areas are higher in price. Areas that are close in and have good employment, public transportation, better commutes will be the ones to hold their value in both up and down times. People are gravitating towards the areas that provide good services and easier commutes. I would look in those areas first. Over time, these areas will maintain their values far better than any of the other areas.

    The good thing about purchasing a car is you can go down to Tacoma or Fife or Puyallup and buy the same exact model for less money than if you were to purchase it in Seattle or on the eastside. The location of the purchase makes no difference other than in the cost of acquisition.

    It is hard to compare houses to houses in different because the location does make a huge difference in value. After all, you buy a home and a location, not just a home.

  25. 25
    rose-colored-coolaid says:

    There usually is a reason certain areas are higher in price. Areas that are close in and have good employment, public transportation, better commutes will be the ones to hold their value in both up and down times. People are gravitating towards the areas that provide good services and easier commutes. I would look in those areas first. Over time, these areas will maintain their values far better than any of the other areas.

    I agree with the sentiment here, but disagree with what you actually said. What is definitely true is that more desirable locations will have higher prices. This is true in every market, and is true of every kind of good. However, I have seen no proof that “desirable locations will hold value better”. I think this is just another myth people spout out, without analyzing. It sounds reasonable, but I’m not sure it is.

    What if two houses are identical, but one is in the slums and the other is in upscale neighborhood? To start the slump, the desirable home might be priced twice as high as the other. They both lose value during the crash. The slum lost 30% and the nice one lost 20%. So who did worst?

    It depends on how you justify it. The slum lost less total dollar value, but a larger percent and visa-versa.

  26. 26
    Greg Perry says:

    Matthew, you ask,
    “Do you have any data to back up your point? ”

    Absolutely.

    Here’s a post I made back in September one of the worst of months. The other link I supplied was a broad brush.

    http://blog.seattlepi.nwsource.com/realestate/archives/122563.asp

    You’ll see examples of the weekly charts I follow. Again, these charts where from mid September during a 4 week period that the market hit the skids. Area 705 has 2 low end price ranges that are classified as Seller’s markets, while the next 4 are Balanced markets. The overall area was balanced, at the same time virtually the entire Region had slipped into a Buyer’s market.

    Currently inventory is absorbing fairly rapidly in areas 705 and 710 in the lower price ranges. Most the other Seattle and Eastside areas are seeing absorption in the low end. Area 500 for some reason is an exception and is lagging.

    You also say, “Talking about markets within markets seems to be getting a bit ridiculous.”

    The Tim’s graphs clearly demonstrate different markets within the Region. Every MLS zone has different patterns of inventory movement.

    I’ll counter you idea by saying that any real estate professional that doesn’t understand the market nuances within an MLS zone is not very skilled at what they do.

    As I wrote in that PI post, AR’s can be computed for a Region, MLS zone, neighborhood, and right down to the house style within a neighborhood.

    RCC, Think about what you wrote here,
    However, I have seen no proof that “desirable locations will hold value better”. I think this is just another myth people spout out, without analyzing. It sounds reasonable, but I’m not sure it is.”

    What is a market if not “supply and demand’? When demand is high, prices rise. MLS areas 705 and 710 hold their value better than MLS area 720, or 730 to the north.

    Software engineer:
    Put a shack on the shores of Lake Washington and you’ll have a million dollar house. Come to think of it, million dollar homes are selling much more quickly in MLS area 510, Mercer Island and 520 West Bellevue than rural 550 Redmond. Yes in real estate, it always comes down to location.

  27. 27
    george says:

    Greg and EconE: thanks to you both, but that doesn’t answer my question.

    Condos and SFH may be apples and oranges, but you need to take into account that some buyers don’t draw the distinction: some are just looking to find the nicest piece of fruit they can for a good price. So…looking at just one set of numbers doesn’t tell you enough.

    Beyond fruit, assume 25 percent of buyers are seriously looking at both SFH and Condos in a market with 5 MOS for SFH; and 12 MOS for condos. That’s a very different market for SFH than one in which there’s 5 MOS SFH and 2 MOS Condos.

    The second example is clearly a sellers market for SFH. The first one sounds to me like a buyer’s market for SFH. Right?

  28. 28
    matthew says:

    Greg,

    I took a look at the other link. It appears that analysis was cherry picked amongst: two areas Ballard/Greenlake and Redmond. Not really sure how helpful that is when looking at how the low end is holding up in the greater Seattle area (after all this is Seattlebubble.com not Redmond/Ballard bubble.com).

    Also, according to the info from Tim, it appears that Dec and Jan were terrible months in most areas. Do you have a breakdown for absorbtion on the low end that includes all of King County?

  29. 29
    EconE says:

    George…I completely agree with you WRT some buyers not drawing a distinction between SFH’s and condos in certain areas and certain situations. However, within the Downtown Seattle area there really isn’t much of a choice as 99.9% of the housing stock is multifamily I assume. That’s why I’m curious to see what the chart for that area would look like.

  30. 30
    Greg Perry says:

    Matthew,
    Yes, I used 2 examples from all the SC and KC AR charts. One from the Westside and one from the Eastside.

    Do I have low end absorption rate breakdown for KC? Yes, of course (area by area). Will I post them? I’ll put something together over at the PI Blog within a couple of weeks or so. As Tim will attest, these data posts take quite a bit of time. Currently I do have quite a few buyers and some move/up, move/down buy/sell projects.

    The spreadsheet is compiled weekly, for all areas, by price point, just as the examples you saw from the link. As I mentioned, starting mid January (about the time interest rates took a dive) inventory started absorbing in the lower price ranges throughout Seattle and the Eastside, with area 500 for some reason remaining quite soft.

    By the way, if you study the colors in The Tim’s graphs, you’ll see for yourself that most MLS areas Seattle and the Eastside absorbed inventory from December to January –despite more inventory coming onto the market in January. There was a higher rate of sale and the absorption did not happen in the high end.

    I don’t follow the south end that closely, nor the northern areas of Snohomish, but have the data.

    The main point that I want to make is that AR’s vary greatly between different price points within the same MLS area. Some price ranges may be sellers advantaged markets, some balanced and some buyers markets within the numbers that were posted within the graphs.

    George,
    When I have a client that could go either way (Condo or SFH) personally, still don’t combine SFH and Condos. I work with the AR’s separately.

    While combined SFH and Condos IS data, for me it’s not all that valuable and I rarely look at it. But…..others may share a different view……

  31. 31
    Tom says:

    Tim,
    Thanks for the great charts. If you can find the data from other cities or regions, it would be interesting to look at the correlation in time between the growth in MOS (esp. above 6 months) and the decline in house prices. E.g., how long did it take, on average, from when the MOS went above 6 months to when YOY price changes went negative?

  32. 32
    george says:

    Greg,

    With respect, this is not about individual clients’ preferences. It’s about what 4 MOS SFH actually means.

  33. 33
    rose-colored-coolaid says:

    What is a market if not “supply and demand’? When demand is high, prices rise. MLS areas 705 and 710 hold their value better than MLS area 720, or 730 to the north.

    Greg, I actually do mean what I said. I expect desirable locals to end a slump with higher prices than slums. But I also expect them to start the slump with higher prices. I think both of these properties are completely reasonable and correct.

    What I haven’t seen proof of is that nicer areas lose less total value than the slums. Here’s some numbers. Auburn condo for $250k, downtown condo for $500k (assuming are of similar quality). I don’t think it’s unreasonable that the DT version would sell for twice as much at the markets peak.

    So here’s the rub, let’s say the DT condo loses 20% of it’s value, that’s a $100k loss. Whereas, if the Auburn condo loses 30%, it’s only $75k of total loses.

    My point was you can retain a higher percentage value while still losing more total money. And if you put $50k down on both made-up-example condos in 2005, you have lost more money in the desirable location.

    I don’t know one way or the other how this plays out. I was just suggesting that most people take it as fact, when maybe it’s just another myth of sorts.

  34. 34
    Debra Sinick says:

    Rose-colored-coolaid.

    And the condo in Seattle that lost 100k will probably bounce back far more quickly and for far more money over the long haul than the Auburn condo. The key is to look at these purchases over time. When the market rebounds, and it will, the Seattle condo will appreciate far more quickly.

    The other issue is quality of life. Auburn is a fine place, but you must commute to everything, particularly most jobs. Commute and proximity to services is part of a lifestyle choice. The people who bought in Seatlle obviously have the money to buy that 500k condo, but are also looking for the lifestyle the area offers.
    There is nothing wrong with buying a condo in Auburn or Kent or Duvall or anywhere else. People will need to make decisions based on financial needs and quality of life issues.

  35. 35
    Greg Perry says:

    Nice response, Debra,

    RCC, the downtown condo may be a good case for your idea. Keep in mind that the downtown condo market is an entity of it’s own, influenced by supply and demand, especially new construction.

    Take the example out of downtown and compare a 1970’s condo head to head in Redmond and Auburn and the Redmond condo will hold value longer, and if prices decline they won’t be as steep and the recovery will be quicker. There is more pressure on housing in Redmond because of convenience and employment.

    Core areas hold value longer than outlying areas. (and recover more quickly)

  36. 36
    AMS says:

    “To calculate months of supply for any area, you simply divide the total number of homes for sale by the number of pending sales.”

    Well this is not how I compute the MOS. For most months and markets the closed sale number is lower than the pending sales, so for consistency I always use closed sale count, rather than taking the minimum between the two. This accomplishes two things: 1. It uses actual sales. In other words it does not include transactions that fall apart after going pending. 2. It almost always minimizes the denominator, so it maximizes the MOS. I’d rather know the higher amount and adjust downward from there, rather than try and guess the sensitivity of the MOS formula to the difference between pending and closed sales.

  37. 37
    The Tim says:

    I posted this in the previous discussion since somehow we got onto MOS there too (I think maybe someone meant to post on here, but whatever), but I’ll repeat it here:

    For what it’s worth, I didn’t make up the MOS figure, I’m just using it. I got it from the NWMLS themselves, who occasionally report on it. See an example here. They use pending sales, so I use pending sales, so as to reduce confusion. If they’re defining “months of supply” as:

    [total inventory at the end of the month]
    —————————————————-
    [pending sales for the month]

    Then I’m going to stick with that definition if I’m using the same term. If we come up with a better measure of market performance, we’ll give it a new name.

  38. 38
    AMS says:

    You’re right, the person at NWMLS does appear to be using Pending Sales. Today the difference isn’t much anyway, but I’ll be watching for the day that the gap between pending sales and closed sales increases. Then the denominator might become a little more important.

    Thank you!

  39. 39
    Jess-Pumpkin says:

    Wow, 705 and 710 are still very strong — so I’m really not going crazy after all. This explains my inability to reconcile what I read on this blog with what I’m seeing on the MLS and in my search. Maybe I can cut back on the RE-prozac now…

  40. 40
    dECIBEL says:

    The graphs are a great visual time line when coupled with what was happening in lending around September last year. IMHO I think a good deal of the slowdown in our area is due to media induced cold-feet.

  41. 41

    […] I was going to spread out the stats posts a bit, but since people have been asking for months of supply (a.k.a. “absorption rate”) data after yesterday’s inventory post, I’m posting it today. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. […]

  42. 42

    […] Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. […]

  43. 43

    […] Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. […]

  44. 44

    […] Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. […]

  45. 45

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. I apologize for the tardiness, I was hoping to have the color-coded map ready by this […]

  46. 46

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Don’t forget you can view a map of these areas […]

  47. 47

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  48. 48

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  49. 49

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  50. 50

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  51. 51

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  52. 52

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  53. 53

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  54. 54

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas […]

  55. 55

    […] 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Also, view a map of these areas here. In place of our usual boring static charts, this month we […]

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